August 29, 2019 | Policy Brief

Despite Talk of Trump-Rouhani Summit, Treasury Imposes New Sanctions on Iran

August 29, 2019 | Policy Brief

Despite Talk of Trump-Rouhani Summit, Treasury Imposes New Sanctions on Iran

Amidst reports of a potential summit between the U.S. and Iranian presidents, the Treasury Department sanctioned two procurement networks this week for aiding Tehran’s military and missile programs. These designations, the latest in a steady series of penalties from Treasury, add another vector to the “maximum pressure” campaign that has already inflicted substantial damage on Iran’s economy while exposing its illicit conduct.

National Security Advisor John Bolton said this week that sanctions would be lifted only after, not before, a comprehensive deal with Iran that addresses terrorism and regional aggression, not just the nuclear issue. Under such an accord, the U.S. should ease pressure on the persons and entities currently tasked with improving Iran’s missile capabilities only when there is a demonstrated change in their behavior. Rewarding anything less would be tantamount to offering sanctions relief for a photo-op.

According to the Treasury Department, both procurement networks have ties to sanctioned entities within Iran’s sprawling defense industry through a series of front companies. Both the U.S. and EU currently maintain sanctions on various companies that handle production and procurement for the Iranian defense sector (although the EU sanctions are slated to terminate no later than 2023, as required by the 2015 nuclear deal). Pursuant to Executive Order 13382, issued in 2005 to counter the proliferation of weapons of mass destruction and related delivery systems, Treasury added five Iranian persons and five companies (four Iranian, one in Hong Kong) to the blacklist known as the Specially Designated Nationals list. These entities are part of two groups to which Treasury refers as the Dehqan and Shariat procurement networks.

The Dehqan network, led by Iranian nationals Hamed and Hadi Dehqan, facilitated “more than ten million dollars’ worth of proliferation-related transactions” for Tehran since 2017. The ultimate beneficiaries of their schemes were companies with ties to Iran’s sanctioned Islamic Revolutionary Guard Corps, as well as those working to improve Iranian military aptitudes. Treasury noted that this procurement network ran through Hong Kong, long a problematic jurisdiction in Iran’s foreign supply chain for missile technology and components.

The Shariat network, led by Iranian national Seyed Hossein Shariat, “procured large amounts of aluminum alloy products for multiple Iranian entities” that are subordinate to Iran’s Ministry of Defense and Armed Forces Logistics. Aluminum alloy has numerous military applications, including, but not limited to seamless tubes for missiles and rotors for centrifuges. Rolled sheets and plates can also contribute to defense manufacturing. Aluminum alloy is a Nuclear Supplies Group-controlled commodity, meaning it cannot be exported to Iran absent a prior authorization by the UN Security Council, which was likely never sought.

The Iranian press has reported the sanctions imposed against these networks, but has not confirmed or denied their ties to previously sanctioned entities.

While Iranian officials frequently claim that Iran’s diverse missile arsenal draws on domestic resources and manufacturing capabilities, the regime continues to rely on a host of foreign and illicit networks to procure materials and technology, and sometimes even whole systems. This means that sanctions can have both a qualitative effect by limiting the kinds of goods Iran procures abroad, as well as a quantitative effect by slowing the pace of weapons production and transactions related to such programs. If the Trump administration wants a better deal with Iran than the 2015 nuclear accord, such penalties and pressure must be grown.

 Behnam Ben Taleblu is a senior fellow at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


Iran Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance